Recipient Agency Commodity Processing Handbook

1. Recipient AgencyCommodity Processing Handbook ACDA � 2007 Julie Lewis, SNS Mesa USD, Arizona

2. Collaboration of Efforts Donny Cooper, State of Alabama Mary Beth Flowers, USDA/FNS Jean Harris, Pierre Foods Mick Hocker, Feesers Distribution Julie Lewis, Mesa Unified School District Pavel Matustik, Santa Clarita Valley School Food Services Agency Cathy Quick, State of Florida Lynn Rogers, USDA/FNS Melissa Rothstein, USDA/FNS

3. Objective Develop �one-stop� commodity procurement resource for school districts and other recipient agencies Combine existing RA guidance documents Organize content into a user-friendly format Fully describe procurement Simplification of process and procedures Encourage commodity processing

4. Outline Overview: the Process The Processing Procedure Procurement Methods Procurement Topics of Consideration Product Specifications Value Pass Through Methods Products Title Pricing Web Resources Program History Glossary of Terms Glossary of Acronyms Appendix

5. The Process Menus Product Selection Cutting/Testing Usage Surveys Procurement Orders and Delivery Management of Commodity Balances

6. The Processing Procedure Menus Plan ahead Consider menu history: what works and what does not work - take into consideration customer�s tastes, preferences, and meal requirements Pay attention to center-of-the-plate items (entrees/proteins) and high volume items (potatoes/tomatoes). 4. And state and/or local nutrition laws4. And state and/or local nutrition laws

7. The Processing Procedure (cont.) Product Selection Talk to your customers Meet with manufacturers and/or representatives on a regular basis Go to food shows and conferences to learn about the newest products and latest trends Network with peers

8. The Processing Procedure (cont.) Cutting/Testing Request samples of new products and test with kids (and adults) for acceptability Compare new brands with existing brands to determine preferences (blind cutting) ** Must compare �apples to apples� Keep records of the products tested (brands and code numbers) and the results of the tests 1. If you are in a larger district, consider requesting 2 cases of samples so that more kids have the opportunity to taste-test. Demographics can vay. For example: don�t compare a bean and cheese burrito with red sauce with a bean and cheese burrito with green chili. The test results may end up being the justification of using a higher priced product. Also, brokers would like evidence of the test so that they can report findings to their manufacturer. They also need to justify the cost of over-nighting samples. 1. If you are in a larger district, consider requesting 2 cases of samples so that more kids have the opportunity to taste-test. Demographics can vay. For example: don�t compare a bean and cheese burrito with red sauce with a bean and cheese burrito with green chili. The test results may end up being the justification of using a higher priced product. Also, brokers would like evidence of the test so that they can report findings to their manufacturer. They also need to justify the cost of over-nighting samples.

9. The Processing Procedure (cont.) Usage Based on planned menus, determine the number of servings needed to fulfill menu requirements for the entire fiscal school year

10. The Processing Procedure (cont.) Surveys for Diversion of Commodities Planned usage for �brown box� commodities Request for diversion of cheese and other �B� commodities to processors of choice Request for diversion of all other commodities to processors of choice Make calculations based on the drawdown of lbs. of DF per case

11. The Processing Procedure (cont.) Procurement Required by law, based on allowable thresholds for expenditure Must follow the most restrictive rules Timing in relation to survey deadlines

12. The Processing Procedure (cont.) Orders and Delivery Direct from manufacturer to destination chosen by school district Through commercial distribution Fee for Service Modified Fee for Service Net Off Invoice Through state warehouses

13. The Processing Process Management of Commodity Balances Make sure that everyone involved with your allocation is on the same page with the same, correct information: processor distributor state agency you � the recipient agency Be sure to recognize and add any roll over balances to new diversions Ensure that the commercial distributor contracted to handle your commodities has an accurate tracking system Participate in sales verification Ultimately it is your entitlement and your money you must properly manage

14. Procurement Methods Each District�s needs and bidding requirements and purchasing thresholds may be, and often are, specific to that district State and local regulations may be more stringent than Federal regulations and these must be incorporated into the procurement plan Rule of thumb: the most restrictive regulation prevails. Obtaining the best product at the lowest price is the goal in both the competitive sealed bid and proposal 1. Formal competitive sealed bids (Bid) 2. Formal competitive proposals (RFP)

15. Procurement Topics Bid Notification Content of the 1st page of a bid Time Scope of Work Factors used in evaluation Bid covenants Bid period Renewal clause Escalation clause Performance Product specifications Value pass through methods Pricing Cost analysis Record Keeping Inventory reconciliation Storage fees Availability Insurance Delivery requirements Transportation and title Delivery/freight charges Penalties/contract termination Regulatory Risk and safety Payment terms Samples

16. Product Specifications Product specifications should be a thorough description, inclusive of the following factors: CN Labeling and Nutritional Information � Identify the labeling requirement and any nutrient maximums. (�not to exceed % fat�, etc.) Commodity ingredients � Indicate which USDA raw ingredient will be reprocessed. Yield � Request product yield info and indicate how/if yield will be used to evaluate the bid. Brands � As a result of product testing, list approved brands. Consider matching commercial codes and nutritional content should commodity bank run dry. Quantity desired � Be realistic. The more accurate the numbers, the more aggressive it will allow the manufacture and distributor to be on cost.

17. Value Pass Through Methods Fee For Service � price net commodity Rebates � commercial price, rebates can be automatic or submitted manually Modified Fee for Service (through commercial distributor) Indirect Discount (Net Off Invoice - NOI) � commercial price minus the value of the commodity ingredients

18. Title of Product Fee for Service transactions The state agency or USDA (for national processing agreements NPA) holds title of the products until the product is received by a RA Be sure the commercial distributor has proper insurance for market value of commodity-processed products if commodities are in their control at any time

19. Title of Product cont. Net Off Invoice (NOI) transactions This is a commercial purchase The RA takes title once the distributor delivers the product

20. Pricing Design your bid document to accommodate desired units of delivered product by: Serving Pound Case etc. Ask on the bid form to list commercial and commodity equivalent (if available), allowing bidders to list value pass through and/or fee for service

21. Web Resources Commodity Foods Network ACDA USDA/FNS/FDD Homepage Commodity Files FDD Training SNA USDA Food Buying Guide Approved National Processing Agreement Manufacturers

22. Program History What is processing? What governs the processing program? History of state processing program.

23. Appendix NOI RA & Distributor sample agreement FFS RA & Distributor sample agreement Policy memo FD-025 Vendor meeting sample form Cafeteria manager survey sample form Food sample form Student survey I sample form Student survey II sample form

24. Access to the Handbook www.commodityfoods.org Go to the �Members Only� link and log on Go to the Processing link and scroll down

25. More to Come This handbook is a �live� document which will be edited and updated as time goes on. Topics for discussion in 2007 are: Buy American Provision Actual examples of good product specifications. Actual examples of good bids and proposals

26. Summary Design fantastic menus Know what you want and how much you want of it Divert, divert, divert and maximize dollars Procure with integrity to fit your districts needs Manage your balances Be a good customer

27. The End�